#personalfinance #investing #DebtFree - Thread on common personal finance mistakes which most of us could be privy to. @AdityaD_Shah @dmuthuk @invest_mutual @RichifyMeClub @Longterm_wealth Wanted to share my experience and corrective action taken. I had invested in a second
property as a pure investment (not to stay in) - with around 65% of the value being funded by a housing loan. I had loan equivalent amount invested in direct equities, and was convincing myself all along that as long as the returns on equity are higher than the interest rates on
housing loan, I had an arbitrage and hence continued paying EMI's ( another mistake in the bargain being - increasing the cost of acquisition of an asset class which was already giving negative returns). March'20 happened and 25% of my equity portfolio was wiped out - and I
realised my error in judgement - but was given an opportunity over the past 4 months wherein I recouped most of my losses - now have liquidated my stocks and cleared my loan and am debt free. Learning - Always prioritise clearing debt and then think about investing.
Second error being i had no separate emergency fund, my logic being why park monies in a fixed deposit where the returns are negligible when the same can be liquidated from my stocks in T+2 days. The error in judgement here being - if I had needed some monies for an emergency
in early April - I would have liquidated my need from equities at an all time low and booked a capital loss. Learning - Emergency funds should always be deployed in liquid debt where returns should not be a priority. Purpose of debt element in our savings portfolio should be
more of capital protection than returns. Starting afresh in building my emergency corpus and starting SIPs start ion next year to restart the investing journey. Finally to share a synopsis - the order or savings should be:
$$ - Building of Emergency Corpus
$$ - Being Debt Free
$$ - Building of Emergency Corpus
$$ - Being Debt Free
$$ - Commence the Investing Journey.
Hope sharing of the experience and mistakes committed helps - hence sharing. Thanks for taking time to read.
Hope sharing of the experience and mistakes committed helps - hence sharing. Thanks for taking time to read.
